Ride-hailing apps drive Saudi's economic change

08 Jan 2017 - 21:18

Reuters

Dubai: Saudi Arabia hopes its plan to bring a further 1.3 million women into the workforce by 2030 will be given a lift from ride-hailing apps Uber and Dubai-based rival Careem.
Ride-hailing apps have come under intense scrutiny from governments and regulators across the globe as they disrupt traditional taxi businesses.
But Saudi Arabia courted Uber and Careem, offering state investments, to support its Vision 2030 economic reform plan.
With a budget squeezed by lower oil prices, the plan aims to draw workers away from government jobs by creating 450,000 private sector positions by 2020. Uber and Careem say they will create up to 200,000 jobs for Saudi men in the next two years.
By offering women a way to get to work, it should also help meet the plan's goal of increasing the female workforce by five percentage points in the next five years to 28 percent.
"This is the next best thing to women being able to drive, because you are in control of your time, no more wasteful waiting around," said Marwa Afandi, a 36-year-old marketing executive.
With the workforces of Uber and Careem easily expected to overtake the 65,000 nationals employed by state oil giant Saudi Aramco, the kingdom has invested in both companies.
Saudi's sovereign wealth fund put $3.5bn into Uber in June 2016 while state-controlled Saudi Telecom Co announced on December 18 it bought 10 percent of Careem for $100m.
"The percentage of Careem captains who are Saudi has jumped from effectively zero to 60 percent in the last 12 months, and we aim to employ 70,000 Saudis by end 2017," said Abdulla Elyas, co-founder of Careem.
Women already account for around 80 percent of Uber and Careem's passengers, the companies say.
"In a country where they (women) cannot get behind the wheel we are offering both the women and the government a win-win solution," said Zeid Hreish, Uber's general manager in Saudi.
A personal driver offers the most cache for middle- and upper-class women. But as these cost as much as 3,000 riyals ($800) a month, around 20 percent of the average monthly household income, women are always looking for cheaper options.
Some wealthier Saudi women have never used the country's existing taxi system because it is not seen as acceptable for them to travel in the older vehicles that are often provided.
Uber and Careem offer an alternative because they require their drivers to use cars that are less than three years old.
Uber works with car financing companies in Saudi Arabia to get deals to help its drivers buy newer cars. The use of the app for booking a car also allows a passenger to select a particular driver and some believe that the use of smart phone technology brings a better class of driver.
There is little difference in price between a journey with Uber or Careem and a local taxi company but the industry does not feel threatened because it caters to a different market - road-side taxi hailers are usually lower income men and do not own smartphones. "We have very little overlapping demand with Careem and Uber," said an assistant manager at a Jeddah-based limousine company, who wished not to be named.
Careem is however, developing a subsidised rides programme for low-income working Saudi women with the Ministry of Labour.
The high female engagement with such apps also reflects how social attitudes are evolving in the kingdom. The ride-hailing scenario has jumped aided by a zero tolerance policy for driver complaints operated by Uber and Careem.
"I am comfortable in the car with the driver because we are getting a professional service from a company where the driver will be held accountable for any complaints made against him," said Alia Shayef, a 42-year-old banker living in Jeddah.